Counter-Intuitive Managerial Interventions in Complex Systems

Kambiz Maani, Anson Li

Abstract

Research, as well as decades of working with managers across diverse cultures, nationalities, and industries, has revealed consistent patterns of counter productive decision making in complex systems. In this regard, managers appear to exhibit an unmistakable tendency to “over intervene” in the systems (companies, organizations, communities, etc) for which they are responsible hence generating unnecessary fluctuations and instability in their organizations. Maani, et al (2004), and Sterman, et al (1989; 2000) have studied these phenomena in experimental and simulated environments respectively. Anecdotal evidence, as well as research results, highlights a number of mental models and assumptions commonly held by managers. These are outlined below:
1. Dramatic change should lead to dramatic (positive) results. Our research shows that often the opposite happens.
2. The more change initiatives (interventions), the better the results. Again our research shows that “over-intervention” is counter-productive.
3. Managers often ignore “soft” variables (eg, morale, stress, burnout, loyalty, etc) to the detriment of their organizations. Yet, “soft” variables are powerful lead indicators of performance.
4. Managers are often oblivious to “systems delays”. Lack of awareness/attention to delay undermines performance and inhibits system stability.
5. Organizations and managers often judge performance by short-term results. Experience shows that expectation of short-term results is unrealistic and misleading and can lead to counteracting outcomes as performance often declines before it improves.
6. Organizations and managers tend to use too many performance measures (ie, KPIs). Since "what gets measured gets done", excessive and misguided measures can lead to poor results and unexpected consequences.
7. It is not enough to know what actions need to be done. Order and timing of actions are as important as the actions themselves.
The propositions outlined above collectively form the research questions posed in this paper: “Why managerial interventions in complex organizations often produce counterintuitive failures?” In this research, empirical evidence using realistic simulation models of organizations (microworlds) provides supports and sheds light on the above propositions. The results confirm findings from recent longitudinal case studies of organizations by Collins (2001). Research subjects comprise MBA and graduate business students and practicing managers. The paper deals with systems thinking theory and complex decision-making and their implications for transforming managers and organizations towards sustainable performance.